California regulators Thursday unanimously agreed to revise a nine-month-old investigation of utility holding companies now that the federal Public Utility Holding Company Act (PUHCA) has been repealed. Thursday’s action by the five-member California Public Utilities Commission (CPUC) alters the scope and schedule for looking at utility holding companies and the relationships among subsidiaries — both utilities and nonutilities.
“The general subject of utility holding companies and affiliate abuse rules remains the same,” said CPUC Commissioner Geoffrey Brown, noting that much of the focus of the investigation is unchanged. However, he said there will be a component looking at the issue of “highly compensated senior executives” and there will be comments from parties and a workshop prior to the CPUC report of the latest review of holding companies and utility affiliate abuse.
Brown said the CPUC needs to reexamine utility affiliate rules for several reasons that existed last October when it first ordered the investigation. The biggest reason is the repeal of PUHCA. In addition, there is the increasing occurrence of what the CPUC called “circumstances that create conflicts for the utilities between serving their customers or helping their holding companies and other affiliates.” The expected increase in utility consolidation through mergers and acquisitions is another factor, Brown said. “Reports and audits suggest a highly integrated relationship between utilities, holding companies and affiliates that may have an adverse effect on competition,” he said.
Brown also noted that the California legislature is currently considering a bill that would require the CPUC to report on the impact of PUHCA repeal.
Brown’s colleague Commissioner John Bohn added a request to the utilities and their holding companies that they “seriously consider these issues and comment forthrightly and promptly, and then, I think the airing of these issues will clear the air, so to speak, and provide more clarity of policy as well.”
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